FIRST DIVISION

[G.R. No. 189358. October 8, 2014.]

CENTENNIAL GUARANTEE ASSURANCE CORPORATION,

petitioner, vs. UNIVERSAL MOTORS CORPORATION, RODRIGO
T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO
DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and PETER YAP,
respondents.

DECISION

PERLAS-BERNABE, J : p

Assailed in this petition for review on certiorari 1 are the Decision 2 dated
February 25, 2009 and the Resolution 3 dated August 14, 2009 of the Court of
Appeals (CA) in CA-G.R. SP No. 02459-MIN which affirmed, in part, the Order 4
dated May 13, 2008 of the Regional Trial Court of Cagayan de Oro City, Branch
39 (RTC) allowing the execution pending appeal of the Decision 5 dated October
31, 2007 (October 31, 2007 Decision) of the RTC in Civil Case No. 2002-058, but
limiting the amount of petitioner Centennial Guarantee Assurance Corporation's
(CGAC) liability to only P1,000,000.00.
The Facts
The instant petition originated from a Complaint for Breach of Contract with
Damages and Prayer for Preliminary Injunction and Temporary Restraning Order
filed by Nissan Specialist Sales Corporation (NSSC) and its President and General
Manager, Reynaldo A. Orimaco (Orimaco), against herein respondents Universal
Motors Corporation (UMC), Rodrigo T. Janeo, Jr. (Janeo, Jr.), Gerardo Gelle (Gelle),
Nissan Cagayan de Oro Distributors, Inc. (NCOD), Jefferson U. Rolida (Rolida), and
Peter Yap (Yap). The case was raffled to the RTC and docketed as Civil Case No.
2002-058. 6
The temporary restraining order (TRO) prayed for was eventually issued
by the RTC upon the posting by NSSC and Orimaco of a PhP1,000,000.00
injunction bond 7 issued by their surety, CGAC. The TRO enjoined
respondents UMC, Rolida, Gelle, Janeo, Jr., NCOD, and Yap (respondents) from
selling, dealing, and marketing all models of motor vehicles and spare parts of
Nissan, and from terminating the dealer agreement between UMC and NSSC. It
likewise restrained UMC from supplying and doing trading transactions with
NCOD, which, in turn, was enjoined from entering and doing business on Nissan
Products within the dealership territory of NSSC as defined in the Dealer
Agreement. The TRO was converted to a writ of preliminary injunction on April 2,
2002. 8
Respondents filed a petition for certiorari and prohibition before the CA, docketed
as CA-G.R. SP No. 70236, to assail the issuance of the aforesaid injunctive writ.
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 On July 24, 2002, the CA rendered a Decision holding that the RTC committed
grave abuse of discretion in issuing the writ absent a clear legal right thereto on
the part of NSSC and Orimaco. Consequently, the April 2, 2002 Writ of
Preliminary Injunction issued by the RTC was ordered dissolved. 9
On May 27, 2004, respondents filed an application for damages against the
injunction bond issued by CGAC in the amount of PhP1,000,000.00. 10
The RTC Ruling
On October 31, 2007, the RTC rendered a Decision 11 dismissing the complaint for
breach of contract with damages for lack of merit. 12
It further ruled that respondents were entitled to recover damages against the
injunction bond following the CA's pronouncement in CA-G.R. SP No. 70236, i.e.,
that NSSC and Orimaco had no clear legal right to justify the issuance of the April
2, 2002 Writ of Preliminary Injunction, warranting its dissolution. 13
acEHSI

Accordingly, the RTC ordered NSSC, Orimaco, and CGAC to jointly and severally
pay respondents the following amounts: actual damages and lost opportunities
suffered by UMC in the amounts of PhP928,913.68 and PhP14,271,266.00,
respectively; PhP50,000.00 as attorney's fees and PhP500,000.00 as lost income
in favor of NCOD, Rolida, and Yap; and exemplary damages of PhP300,000.00 for
each of the respondents. 14
Upon respondents' motion, 15 the RTC granted Execution Pending Appeal of its
October 31, 2007 Decision through an Order 16 dated January 16, 2008. It
ruled that there exists good reasons to justify the immediate execution
of the Decision, namely: (a) that NSSC is in imminent danger of insolvency
being admittedly in a state of rehabilitation under the supervision of the
Regional Trial Court of Misamis Oriental, Branch 40 through Special Proceeding
No. 2002-095; (b) that it has ceased its business operation as the authorized
dealer of Nissan Motor Philippines, Inc.; (c) that Orimaco, NSSC's President and
General Manager, has migrated abroad with his family; and (d) that NSSC failed
to file the necessary supersedeas bond to forestall the immediate execution of
the Decision pending appeal. 17 The RTC thereupon issued the corresponding writ.
18

CGAC assailed the RTC's January 16, 2008 Order before the CA through a petition
for certiorari, docketed as CA-G.R. SP No. 02459-MIN, questioning the existence
of good reasons to warrant the grant of execution pending appeal and the
propriety of enforcing it against one which is not the losing party in the case but
a mere bondsman whose liability is limited to the surety bond it issued.
The CA Ruling
In a Decision 19 dated February 25, 2009, the CA affirmed in part the assailed
order by allowing the execution pending appeal of the RTC's October 31, 2007
D e ci si o n but limiting the amount of CGAC's liability to only
PhP1,000,000.00. 20
It upheld the trial court's findings that there are good reasons warranting the
execution of the latter's Decision pending appeal, not only against NSSC and
Orimaco, but also against CGAC whose liability, however, was declared to be
limited only to the extent of the amount of the bond it issued in favor of its
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 limited only to the extent of the amount of the bond it issued in favor of its
principals, NSSC and Orimaco. 21
Aggrieved, CGAC filed a motion for reconsideration 22 which was, however,
denied in a Resolution 23 dated August 14, 2009, hence, this petition.
The Issues Before the Court
The central issues in this case are: (a) whether or not good reasons exist to
justify execution pending appeal against CGAC which is a mere surety; and (b)
whether or not CGAC's liability on the bond should be limited to PhP500,000.00.
The Court's Ruling
The petition is unmeritorious.
The execution of a judgment pending appeal is an exception to the general rule
that only a final judgment may be executed; hence, under Section 2, Rule 39 of
the Rules of Court (Rules), the existence of "good reasons" for the immediate
execution of a judgment is an indispensable requirement as this is what confers
discretionary power on a court to issue a writ of execution pending appeal. 24
Good reasons consist of compelling circumstances justifying immediate
execution, lest judgment becomes illusory, 25 that is, the prevailing party's
chances for recovery on execution from the judgment debtor are altogether
nullified. The "good reason" yardstick imports a superior circumstance demanding
urgency that will outweigh injury or damage to the adverse party 26 and one
such "good reason" that has been held to justify discretionary execution
is the imminent danger of insolvency of the defeated party . 27
The factual findings that NSSC is under a state of rehabilitation and had ceased
business operations, taken together with the information that NSSC President
and General Manager Orimaco had permanently left the country with his family,
constitute such superior circumstances that demand urgency in the execution of
the October 31, 2007 Decision because respondents now run the risk of its non-
satisfaction by the time the appeal is decided with finality. Notably, as early as
April 22, 2008, the rehabilitation receiver had manifested before the
rehabilitation court the futility of rehabilitating NSSC because of the latter's
insincerity in the implementation of the rehabilitation process. 28 Clearly,
respondents' diminishing chances of recovery from the favorable
Decision is a good reason to justify immediate execution; hence, it
would be improper to set aside the order granting execution pending
appeal.
That CGAC's financial standing differs from that of NSSC does not negate the
order of execution pending appeal. As the latter's surety, CGAC is considered by
law as being the same party as the debtor in relation to whatever is adjudged
touching the obligation of the latter, and their liabilities are interwoven as to be
inseparable. 29 Verily, in a contract of suretyship, one lends his credit by joining in
the principal debtor's obligation so as to render himself directly and primarily
responsible with him, and without reference to the solvency of the principal. 30
Thus, execution pending appeal against NSSC means that the same course of
action is warranted against its surety, CGAC. The same reason stands for CGAC's
other principal, Orimaco, who was determined to have permanently left the
country with his family to evade execution of any judgment against him.
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 Now, going to the second issue as above-stated, the Court resolves that CGAC's
liability should — as the CA correctly ruled — be confined to the amount of
PhP1,000,000.00, and not PhP500,000.00 as the latter purports.
Section 4 (b), Rule 58 of the Rules provides that the injunction bond is
answerable for all damages that may be occasioned by the improper issuance of
a writ of preliminary injunction. 31 The Court has held in Paramount Insurance
Corp. v. CA 32 that: HIACac

The bond insures with all practicable certainty that the defendant may
sustain no ultimate loss in the event that the injunction could finally be
dissolved. Consequently, the bond may obligate the bondsmen to
account to the defendant in the injunction suit for all: (1) such damages;
(2) costs and damages; (3) costs, damages and reasonable attorney's
fees as shall be incurred or sustained by the person enjoined in case it is
determined that the injunction was wrongfully issued. 33

In this case, the RTC, in view of the improvident issuance of the April 2, 2002
Writ of Preliminary Injunction, adjudged CGAC's principals, NSSC and Orimaco,
liable not only for damages as against NCOD, Rolida, and Yap but also as against
UMC. As may be gleaned from the dispositive portion of the RTC Decision, the
amount adjudged to the former group was P500,000.00, 34 while it was found —
this time, contained in the body of the same decision — that damages in the
amount P4,199,355.00 due to loss of sales was incurred by UMC in the year
2002, 35 or the year in which the latter was prevented from selling their products
pursuant to the April 2, 2002 Writ of Preliminary Injunction. Since CGAC is
answerable jointly and severally with NSSC and Orimaco for their liabilities to
the above-mentioned parties for all damages caused by the improvident issuance
of the said injunctive writ, and considering that the total amount of damages as
above-stated evidently exhausts the full P1,000,000.00 amount of the injunction
bond, there is perforce no reason to reverse the assailed CA Decision even on this
score.
WHEREFORE, the petition is DENIED. The Decision dated February 25, 2009
and the Resolution dated August 14, 2009 of the Court of Appeals in CA-G.R. SP
No. 02459-MIN are hereby AFFIRMED.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ., concur.
Footnotes
1. Rollo, pp. 9-41.

2. Id. at 45-56. Penned by Associate Justice Mario V. Lopez with Associate Justices
Romulo V. Borja and Elihu A. Ybañez, concurring.

3. Id. at 58-59. Penned by Associate Justice Elihu A. Ybañez with Associate Justices
Romulo V. Borja and Ruben C. Ayson, concurring.
4. See Writ of Execution Pending Appeal; id. at 89-90.

5. Id. at 122-177. Penned by Judge Downey C. Valdevilla.

6. See id. at 46 and 122.
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 7. Id. at 79.
8. Id. at 80.

9. See id. at 163.

10. See id. at 164.
11. Id. at 122-177.

12. Id. at 176.

13. See id. at 162-165.

14. Id. at 176-177.

15. Id. at 178-184.

16. Id. at 83-88.

17. Id. at 87-88.
18. Id. at 89-90.

19. Id. at 44-56.

20. Id. at 55.

21. See id. at 54.

22. Id. at 60-77.

23. Id. at 58-59.

24. See Archinet International, Inc. v. Becco Philippines, Inc., 607 Phil. 829, 843
(2009).
25. Id.
26. See Government Service Insurance System v. Prudential Guarantee and
Assurance, Inc., G.R. Nos. 165585 and 176982, November 20, 2013, 710 SCRA
337, 350.

27. See Phil. Nails & Wires Corp. v. Malayan Insurance Co., Inc., 445 Phil. 465, 473-477
(2203). See also Philippine National Bank v. Puno, 252 Phil. 234, 242-243
(1989).
28. See rollo, pp. 216-217.
29. See Lim v. Security Bank Corporation, G.R. No. 188539, March 12, 2014; citations
omitted.
30. Palmares v. CA, 351 Phil. 664, 681 (1998).

31. Sec. 4. . . . .
xxx xxx xxx

(b) Unless exempted by the court, the applicant files with the court where the action
or proceeding is pending, a bond executed to the party or person enjoined, in
an amount to be fixed by the court, to the effect that the applicant will pay to
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 such party or person all damages which he may sustain by reason of the
injunction or temporary restraining order if the court should finally decide that
the applicant was not entitled thereto. Upon approval of the requisite bond, a
writ of preliminary injunction shall be issued;

xxx xxx xxx

32. 369 Phil. 641 (1999).

33. Id. at 654; citation omitted.

34. See rollo, p. 177.
35. See id. at 164.

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